HOUSE BILL REPORT

HB 378

BYRepresentatives Hankins, Walk and H. Sommers; by request of  Office of Financial Management

Renaming the state employees' insurance board revolving fund.

House Committe on State Government

Majority Report:     Do pass.  (8)

     Signed by Representatives H. Sommers, Chair; Peery, Vice Chair; Baugher, Hankins, O'Brien, Sayan, Taylor and Walk.

House Staff:Pam Madson (786-7135)

AS PASSED HOUSE FEBRUARY 27, 1987

BACKGROUND:

The State Employees' Insurance Board (SEIB), in conjunction with the Department of Personnel, manages insurance plans for state employees. The State Employees' Insurance Revolving Fund finances SEIB's expenses, which include the payment of insurance plan premiums to insurance providers, and staff salaries and other administrative costs.

In 1984, the Legislature enacted provisions requiring the director of the Office of Financial Management to adopt a comprehensive budgeting, accounting, and reporting system that embodies national generally accepted accounting principles, known as "GAAP" (RCW 43.88.037).

SUMMARY:

State accounting requirements for state employee insurance plans are amended as follows to comply with GAAP:

The State Employees' Insurance Revolving Fund is renamed the "State Employees' Insurance Principal Account."  Monies in the existing Revolving Fund are divided between the Principal Account and a newly created "State Employees' Insurance Administrative Account."  The Principal Account includes only the principal activities of the existing Revolving Fund (payment of premiums to insurance providers), while the Administrative Account covers only associated staffing and administrative expenses.

Fiscal Note:    Not Requested.

House Committee ‑ Testified For:     Michael Cheney, Office of Financial Management.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     The state is required by statute to follow generally accepted accounting principles, which implicitly mandate a separate account in the State Treasury for the transfer of funds to insurance providers.  No such account presently exists; funds for insurance providers are commingled with funds used for associated administrative expenses in a single account.  The bill would rectify the problem by dividing the single account into separate accounts for insurance provider funds and administrative expenses.

House Committee - Testimony Against: None Presented.